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AT&T/Time Warner: The Big Bundle is Back! Introducing the $522/Mo Telecom Bill

Phillip Dampier June 13, 2018 AT&T, Competition, Consumer News, Video 3 Comments

Your bundle is bigger than ever.

A-la-carte TV is still dead. Long live the super-sized bundle!

If AT&T and Time Warner wanted to deliver a message to the cable industry as a result of their now-approved blockbuster merger deal, it is one that promises hundreds, if not thousands of more TV channels, movies and shows headed your way in the coming days, bundled into super-sized pricier packages of television, telephone, and internet service.

Despite the fact consumers claim they want to pick and pay only for the entertainment options they specifically want, in reality people are paying for more bundled packages and services — usually from multiple online streaming services — than ever before, with no possibility they will ever watch everything these services have to offer.

AT&T and Time Warner are well aware customers are now subscribing to cable television -and- streaming video services like Hulu and Netflix. But many customers are also buying streaming live cable TV alternatives, despite the fact they already subscribe to a cable television package. Given the option of selling you an inexpensive package of a dozen cable channels you claim to want or selling you much larger and more expensive bundles of services many are actually buying, AT&T will follow the money every time.

What will be different as a result of this merger is where you buy that programming. Before, you may have purchased AT&T Fiber internet access, AT&T wireless mobile phone service, a HBO GO subscription through DirecTV Now, a cable TV alternative, and Netflix. Now, with the exception of Netflix, all of that money will go directly to AT&T. The company will also be able to enhance their bottom line by monetizing content viewed over mobile devices. After taking control of Time Warner’s vast entertainment offerings, which range from HBO to Turner Broadcasting networks like CNN and TNT, AT&T will generously bestow liberal (or possibly free) access to this content for its broadband and wireless customers, while those served by other providers will have to pay up to watch. AT&T will ultimately set the terms of its licensing agreements. AT&T Wireless customers with unlimited data plans already have a sample of this with a free year of DirecTV Now, which customers of other wireless companies have to pay to watch.

AT&T plans to offer the best deals to customers who bundle everything through AT&T. The “quad play” bundle of TV, internet, home phone, and wireless phone will offer customers discounts on each element of the package, but some may experience sticker shock even with the discounts.

The Wall Street Journal noted a premium AT&T customer could pay more than $500 a month for AT&T’s best package — that’s more than $6,000 a year. Most bundled AT&T customers will pay about half that — around $246 a month for a package of 100 Mbps internet, a home phone line, wireless phone and a limited TV package bundling Time Warner content, including HBO. The entry level ‘poverty’ package will still cost around $115 a month.

By controlling each element of the package, AT&T can discourage a-la-carte package pickers by substantially raising the price of standalone services, to encourage bundling. That explains why many customers take a promotional TV offer priced just $10-20 more than the $70 broadband-only package some customers start with. If broadband-only service costs $40 a month and the TV package also costs $40 a month, those leaning towards cord-cutting would find it much easier to pass on cable television.

With Comcast on the verge of picking up much of 21st Century Fox’s content library and studio, Comcast will be able to defend its own turf creating similar giant bundles of content to keep its customers happy. Wall Street is already putting pressure on Verizon to respond with an acquisition of its own to protect its base of FiOS and Verizon Wireless customers.

Companies likely left out in the cold of the next wave of media and entertainment consolidation include online content companies like Google, Facebook, Amazon, and Apple, which will be stuck licensing someone else’s content or bankrolling many more original productions. Charter Communications, which has a small deal with AMC for content, is also stranded, as are smaller cable companies like Cox, Altice, and Mediacom. Independent phone companies like CenturyLink, Windstream, Consolidated, and Frontier are also in a bad position if Wall Street determines telecom companies without content divisions are in serious trouble.

Netflix stands alone as the behemoth content company, and is not likely to be impacted by the current wave of consolidation. Hulu will most likely end up in the hands of a telephone or cable company, most likely Comcast, if it successfully acquires Fox’s ownership share of Hulu.

For customers, your future choice of provider is about to get more complicated. In addition to pondering speed tiers and wireless coverage maps, you will also have to decide what content packages are the most valuable. Your choices will range from basic company-owned networks to third-party services like Netflix and Hulu, as well as full cable TV lineups ranging from DirecTV Now to XFINITY TV. Then get ready for the bill, which will likely include charges for most, if not all, of these services.

The Wall Street Journal explains the current wave of media consolidation. (2:44)

AT&T/Time Warner Win Merger Deal With No Consumer Protection Conditions

AT&T has won its $85 billion bid to acquire Time Warner, Inc., overturning Justice Department opposition in a court case and completely rejecting allegations the merger was anti-consumer and would raise prices by suppressing competition. The favorable decision is expected to signal the business community the time is right for several more multi-billion dollar media mergers.

U.S. District Court Judge Richard Leon ruled the deal can proceed without any consumer-protecting deal conditions, and warned Department of Justice lawyers not to appeal if the purpose was to stymie the deal from closing before the companies’ agreed on deal expiration date runs out, saying it would be “manifestly unjust” and damaging to the faith of America’s shareholders and business community.

Leon read his decision to a packed courtroom, telling the government’s lawyers they had failed to prove their case the merger would harm consumers. Observers called it one of the worst antitrust court losses the Justice Department has faced in its history.

“Today is a bad day for all internet users and media consumers,” said Free Press policy director Matt Wood. “The Justice Department’s failure to bring a winnable case will now set off a wave of communications and media consolidation that was unthinkable even a few years ago. All of us, regardless of our broadband carrier and no matter what we watch, are about to see higher bills, fewer choices, worse quality for competing options and a further erosion of our privacy rights.”

During a six-week trial held this spring, the government argued AT&T’s combination of DirecTV’s 20 million subscribers with its own U-verse TV customers, and its ownership of Time Warner’s pay television networks including HBO and Cinemax and Turner Broadcasting’s news, entertainment, and sports networks, would give the phone company too much power, allowing AT&T to unfairly raise prices for competing cable, satellite, and online streaming companies. AT&T acquired DirecTV in 2015, but regulators were already concerned about AT&T’s size, only approving the transaction with deal conditions.

AT&T argued it was willing to offer arbitration to make sure its competitors received fair deals, and volunteered to not cut off TV networks from customers during arbitration proceedings to resolve contract renewal disputes.

The decision has dramatic implications far beyond the merger at hand. Waiting in the wings are other media companies, Wall Street bankers, and advisers waiting to begin a frenzy of other blockbuster merger deals. Had the court blocked the merger, it would send a strong signal that the Justice Department’s case against vertical integration mergers — when companies buy other companies they do business with — has standing. The total defeat of the Justice Department in today’s decision may make government lawyers hesitant to challenge future vertical integration deals.

Comcast’s all-cash offer for a large part of 21st Century Fox is likely to proceed now that the AT&T-Time Warner merger was approved. More telecom industry deals are expected to emerge later this year.

The Trump Administration’s choice to oversee antitrust cases — Makan Delrahim, sent signals to Wall Street that he is still inclined to be pro-business on merger transactions, telling reporters most proposed transactions were either good for consumers or neutral — a view consumer advocates generally oppose.

“I understand that some journalists and observers have recently expressed concern that the antitrust division no longer believes that vertical mergers can be efficient and beneficial to competition and consumers,” Delrahim said. “Rest assured these concerns are misplaced.”

If the merger is completed, AT&T will now be the country’s largest pay-TV distributor, controlling more than a dozen “must-have” TV networks that competitors cannot afford to be without. The deal will even affect the wireless industry’s competitive landscape. AT&T’s unlimited wireless customers are expected to be given exclusive free access to a bundle of channels filled with Time Warner-owned content.

Comcast Dumps Congestion Management System It Says Was Unused for a Year

Image courtesy: cobalt123Comcast has quietly dropped its internet congestion management system, designed to slow down its heaviest users, claiming it has gone unused for more than a year and was no longer needed.

Originally spotted by readers of DSL Reports, the announcement referenced the system that replaced Comcast’s speed throttle that intentionally degraded peer-to-peer network traffic after Comcast claimed it was unfairly impacting its other customers:

As reflected in a June 11, 2018 update to our XFINITY Internet Broadband Disclosures, the congestion management system that was initially deployed in 2008 has been deactivated. As our network technologies and usage of the network continue to evolve, we reserve the right to implement a new congestion management system if necessary in the performance of reasonable network management and in order to maintain a good broadband Internet access service experience for our customers, and will provide updates here as well as other locations if a new system is implemented.

Comcast’s “protocol-agnostic” network management technology, designed by Sandvine and introduced in 2008, measured customer traffic and singled out heavy users for speed reductions when Comcast’s network was saturated with traffic. Customers were unaware if they were deemed heavy users or if their traffic was targeted for temporary speed reductions. Comcast relied on the technology, along with the introduction of a 250 GB nationwide data cap, to control network traffic and stall the need for expensive node-split upgrades.

Comcast claims the introduction of DOCSIS 3.0 (starting in late 2008) and DOCSIS 3.1 (2017) gradually eliminated the need to maintain the congestion management system, because channel bonding vastly expanded available internet bandwidth. What remains in place in most Comcast service areas is Comcast’s controversial 1 TB usage cap. The company initially claimed its data caps were part of a network traffic management strategy, but more recently the company claims it collects more from heavy users to compensate for its broadband investments.

AT&T Upgrades Home Internet Plans – 5, 100, 300, and 1,000 Mbps Now Available

AT&T quietly changed their home internet plans this week, dramatically boosting speeds for some of their lower-priced offerings in areas served by fiber, while boosting gigabit pricing by $10 a month in some instances.

Last week, AT&T was selling 5, 50, 100, and 1000 Mbps plans in AT&T Fiber areas. This week, customers can choose 5, 100, 300, or 1000 Mbps. Existing customers will likely have to switch plans to get the speed upgrades.

Prices shown reflect a bundled discount in the Chicago area. Prices vary in different service areas and are higher for broadband-only service. Basic 5 Mbps pricing can range from $30-60 a month depending on area and available discounts.

If you are a new AT&T customer, the company is offering a $50 Reward Card rebate (expires 7/31/2018) and a free Smart Wi-Fi Extender (new or existing customers switching to gigabit service only) (expires 6/28/2018). Here are some other important terms and conditions to be aware of:

  • There is a 1 TB data cap on all plans except Gigabit Internet 1,000, which is unlimited. But you can avoid the cap for $30 extra a month (not worth it) or by maintaining a bundle of TV and internet service on a combined bill.
  • All internet offers require a 12 month agreement ($180 pro-rated early termination fee applies).
  • Prices reflect bundled service combining internet with at least one other AT&T product (TV/AT&T Phone/Wireless).

Spectrum Ditching Usage Measurement Meter Tool in July; Usage Caps Not in the Cards

Charter Communications is abandoning any pretense of data caps on its internet service by decommissioning its internet usage measurement tool for residential subscribers effective this July.

Company officials began notifying customers in billing statements that the usage measurement tool will be dropped effective next month. Charter Communications markets Spectrum internet service as free of any data caps, and a usage measurement system only confused customers about whether their internet usage was truly unlimited.

Originally introduced by Time Warner Cable in late 2009 and gradually made available to customers nationwide, the usage measurement tool reported monthly data usage for customers as part of Time Warner Cable’s original 2008 market test of data caps in Beaumont, Tex.

Customers were offered a Lite Tier with a 5 GB monthly cap or 40 GB of usage for the company’s Turbo Tier. Overlimit fees were $1/GB.

The company attempted to expand its data cap trial in the spring of 2009 to customers in Austin and San Antonio, Tex., Rochester, N.Y., and the Triad region of North Carolina. A major backlash, organized in part by Stop the Cap!, resulted in those market trials being abandoned within two weeks of being announced.

Time Warner Cable never attempted to impose compulsory data caps again after its disastrous 2009 trial and Charter Communications quietly abandoned its own frequently unenforced usage caps in 2015, shortly before bidding to acquire Time Warner Cable and Bright House Networks.

By ditching the usage measurement tool, Spectrum will retire the last remaining elements of Time Warner Cable’s legacy of dabbling with usage caps and further monetizing internet usage.

Charter is also forbidden from imposing data caps for up to seven years as a result of deal conditions imposed by regulators in return for approval of its merger with TWC and BH.

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  • dhkjsalhf: "Another classic case of businesses being much smarter than governments." I don't know whether this was sarcastic or not, but I feel it's a sentiment...
  • New Yorker: It makes no sense. I wonder sometimes if raising the limits on how much money rich people giving to candidates could make it more expensive to buy of...
  • New Yorker: Will New York go through with the threat? As an upstater I have seen infrastructure projects drag on in cost and time (eg. 1.5 yrs to repair a tiny b...
  • Matthew H Mosher: Another classic case of businesses being much smarter than governments....
  • Matthew H Mosher: Doesn't matter. Rural NY will remain left behind....
  • Dylan: Hopefully this does not happen as I would like to see Charter continue with its current plans of upgrades in NY, like the 200mbps upgrade. Maybe Chart...
  • Phillip Dampier: If they withdraw the granted merger, Spectrum will not be able to continue business in New York. The franchises, which are still in the name of Time W...
  • John: Charter will not pack it in, the regionality of their franchises and their future value are too important. Franchises in NY are not exclusive, the onl...
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  • Fred Hall: First - as I've said before, $2M is pocket change for Charter/Spectrum. They should just chalk it up to the cost of doing business. Second - so what...
  • Paul Houle: I think the third package was designed to pop eyes. First it is closer to a "quad play" than a triple play bundle. The "triple play" bundle of home ...
  • Phillip Dampier: $40-50 sounds suspiciously low. Are you sure that isn't a promotional rate which customers may not be able to get after a year or two? AT&T's bun...

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